tv U.S. Senate CSPAN February 26, 2010 9:00am-12:00pm EST
and in fact, as you heard, what gmac it is a continued to finance the dealerships in what it meant they wouldn't finance and sales. in fact, as i understand it, during the crisis, gm auto dealership financing went up to 85%, was through gmac. so that's really the question. how important was gmac financing to the survival of gm and ultimately to chrysler, but it is really gm that we're talking about here? mr. whalen? >> for the reasons stated it is important. but it is important to realize the spinoff of gmac from gm was therefore entirely different reasons, which was to get the mortgage business which at the time was seen as attractive, a wave from the dying auto business at gm. so you know, my colleague has addressed this. now we have a situation where the mortgage business is killing the former captive, and we have constructed yet a new rationale for banning it out.
is shipped for production. the dealers are the customer of general motors. >> i have come to learn this. >> if gmac did not exist gm would have been chapter 7. >> let me see if i understand the rest of the pieces. you raised the question about if gm had failed, let me ask about securitization. there is no financial or business reason to rescue gmac. there were private alternatives available to gm and chrysler in the marketplace for for can landing and the securitization of auto loans. in fact, it seems almost securitization collapsed from 20 one billion dollars in the second quarter of 2008, < $3 billion in the second half of
2008. that doesn't seem to be an immediate recovery. i don't think i am understanding your point. i want to make sure i get it. >> unlike call of the other asset classes in the securitization world particularly mortgage securitization, auto paper is very short in maturity, very simple deals and does have significant -- basically fix itself and ford is the example. >> going from $21 billion to $3 billion doesn't look like it fixed itself and only started coming back once talf was in place. >> if you focus -- part of the attraction for investors was the collateral behind the financing but the real practical attraction is the ability of the issuer to perform on the warranty is made in the
securities offering, the ability to buy back debt loans or substitute bad loans. when gmac got into trouble, wall street shrank back. the banks ran from this market too as i am sure michael ward will confirm. they wanted no part of it. what was left for the viable auto finance companies that were willing to continue doing business at the low levels of sales we saw during that period. i haven't gone through those numbers in detail. i don't quibble with your characterization but this is an example of an asset class that is successful as opposed to private-label mortgage securitization is which i don't know if they will ever come back. >> it had a substantial period in real trouble. >> let me pick up on that. we have heard gmac is going to try to change its name and
perhaps appeal to other parts. they need to make the chrysler guys feel they are welcome. the former gmac label. also gmac has government backing and allied bank has something to support its activity in this market. is gmac getting speed in its current form? like fannie mae and freddie mac with implicit government backing? is that arguable? is it getting better types of financing possibilities because of this backing? what is the effect on competitors? >> gm, chrysler and gmac are government sponsored entities by definition. however, because of the unresolved issues that gmac, they have not improved to the point that they are comparable
to other gses. if they were and the marketplace didn't have any fear that restructuring might take place, it would be narrower. going back to the last conference call where gmac management discussed strategic alternatives going back to one of the earlier questions analysts are still asking them if there is not in fact a potential bankruptcy for risk cap. the problem we have is now that we are a bankholding company, by we i am talking about gmac. you can't do that. the affiliates of a bank holding company defaults. the whole group defaults. that is the cul-de-sac could we have driven into now. the decision to make this finance company a bank holding company has limited the treasury at flexibility and they come back and say we didn't have any choice.
>> i am not as familiar with that side of the market but as you look to the auto industry as far as the retail consumer and the fact that it is perceived that gm is backdoor owned by the government has heard general motors in the rugged -- marketplace and to the extent that gmac is considered to be back along those lines they will lose interest from dealers because a big part of owning a franchise is what else is behind it including dealer financing and other vehicles -- variables. >> you made the point that internet banking has yet to prove its mettle in the marketplace. i was wondering what your view is with respect to how allied bank is a key part of the package of revitalization. >> as management has articulated their vision for the future they seem to be focused on a broad consumer banking franchise, not just of those sales. i don't think a model line is
viable with the bank holding company. you have to make mortgage loans and other types of loans. the trouble comes, i can point to a number of piers that when you don't have brick and mortar branches you have to go out and acquire and retain customers using advertising of various types which can be expensive and the example i used in my testimony was ing direct which was a reasonably good bank but they bid for deposits because the home office wanted them to be big. we have a bank holding company that has to bid up for deposit because it is a functional replacement for commercial paper. koren -- in a difficult business model people will business model choices where we don't have funding flexibility. hopefully that will come. we are still being driven to finance sales as if we were a captive. that is really in soluble at the
end of the day. let me put it to you this way. i have friends in the banking business who say it is possible to have a profitable internet bank but i don't have one to show you right now. >> a few seconds here. >> i would like to follow up with you on this issue of strategic plans going forward. very interested in your comment that a model line bank is not a viable business model. recognizing your comments about the business of rescap political what are your views whether gmac should divest itself of those non-core businesses. would it strengthen the institution or would it increase the risk to the taxpayers by increasing the interdependency and concentration of its affiliation with gm? >> if you were to sell it if you could it would end up costing
you money. you would give the entity to someone else but you would have to make warranties regarding any future claims. it would be fairly onerous. i certainly wouldn't buy the company in its current state even if they write down the balance sheet exposures to zero you still have the legacy of balanchine securitization securities that the management team alluded to. if you take a reasonable fraction of that 25% default rate as being potentially kicked back to them in terms of demand for repurchase, that is going to be a good size number. the other thing i will comment on that just occurred to me. this whole issue of modification, modification is not a panacea. the read default rate on it is quite high. i look at modification with respect to all the banks i cover right now as essentially a place to hide losses. as soon as the bank says this
loan is being modified they don't report losses on it any more. there is a backlog of losses in the banking industry that is probably as much as 1 third to thirty% of the current charge operate that you can see reported in the fdic quarterly that just came out this week. as you go forward keep in the back of your mind that there are lots of hidden liabilities in this company and management is trying to deal with them. they indicated the reserve established but that reserve may be woefully inadequate if we don't see a really strong uptick in real-estate prices. >> you would expect to see and support a continuation of that non-core business in the mortgage? >> it looks like that is what they are doing. they are originating conforming paper that they can sell to fannie mae and freddie mac which is not an unreasonable process but if those loans go bad as you have seen in the newspaper recently with respect to the federal home loan banks they
will come back and ask the issuer to repurchase the default and that can be -- >> in terms of a business model going forward and growing that business? is that where there focus should be where it is standing into other consumer and finance business? >> going back to mr. michael ward's, and i don't think it is liable as a stand-alone and would not make a very attractive i ipo. the earlier witness alluded to the credit card model lines. they have all been bought. the only one left is cap one. they tapped into regional banks so they want get bought. they had to diversify as well. just being a credit card company was not sufficient. >> you made reference to picking up on some of the question i had to the treasury panel as to whether they were exploring a combining of gm and gmac
integrating back into gm. you seem supportive of that. >> it is the only way to get full value back to us as taxpayers. general motors will come out a substantial discount to ford. if you put numbers on paper, ebitda doesn't get you a lot when you are six times on a p/e basis it will take decades to get the investment back. if you enhance it by putting it back in, it stands at a much better footing relative to ford and toyota, the two principal competitors. there was a question earlier, why did they get into the rescap business? it was the goal of the manufacturers when they are flush with cash. to diversify financial services operations was one of the few areas large enough to make an impact on the automotive business because of the size and scope.
ford had several but they divested them. gm held onto them. >> your assessment of what the strategic plan will look like when it comes out of gmac? >> i am hopeful as an auto analyst that gmac is reintegrated with general motors. >> very interesting. thank you. mark mcwatters? >> your current rating for allied bank is f and gmac is negative. what do these institutions need to do to change f to d or c or something less than-? >> it is driven primarily from the losses they have been reporting on the income line. provisions for future credit
losses, put it in reserve accounts of the bank is losing money. we included the history of their ratings going back a few years at the back of my testimony. when banks started reporting losses they went from c to f. we have a fairly draconian letter rating system for banks because we have 25,000 retail customers who use our readings as an asset allocation tool. we rate 4,000 banks f out of 80,000 institutions. half of those have many factors. about half are just return on equity stories. provision for credit loss. you will notice the score for allied is very high because of their restructuring in the fourth quarter. they don't how horrible charge of rape on normalized basis if you go back a few quarters but rallied to the bath in the fourth quarter. they wrote down a lot of assets and move the rescap because they
want to isolate the bank from the bad things going on at rescap. i want to see operating losses, i will keep a negative outlook on the cap any of this company as a whole in july see what is going on in rescap. they turner company around, all that is for naught if we still have a functional equipment -- equivalent of chernobyl in the quarter. that is what rescap is. you can't do anything except put them into bankruptcy. that is why i alluded to the difference between washington mutual and bear stearns and with respect to j. p. morgan. study those two cases. in the case of washington mutual all of the liquidated claims are in bankruptcy court. there is no litigation regarding those securitization. on the other hand with bear stearns because it wasn't restructure you are going to see a long period of j. p. morgan dealing with that pain. >> i am not familiar with the
banks and how they rate themselves but seems like a pretty disciplined strategy. i am citing with him. >> fair enough. on page 10 of your paper you say converting gmac into a holding company was a bad public policy choice and equally bad financial decision. why is that? >> you took a company that was insolvent and pushed through the regulatory process at the fed, disregarding the capital and managerial criteria and the bank holding company act and after the fact treasury put capital into an and restructured entity and tried to buy time. i would try to calculate the t.a.r.p. investments as buying time. we have a saying in the analytics business. when you're in a hole stopped digging. ultimately today it would be
beneficial to general motors if that is our real objective to turn the company around, if the fed and treasury put their heads together and put gmac into bankruptcy and do it on an expedited basis and let gm buy it. that would be a happy ending. get the acquiescence of the fdic not to seize the bank and we will all live happily ever after. >> on page 15 of your paper, you talk about the put back rights with respect to the sub prime loans. i ask the question of management. there doesn't seem to be a lot of concern here. they reserved ford and it is not as much of a problem. but you have underlined it in your paper. >> when you deal with public disclosure and public companies
and gmac still has disclosure responsibilities, you always tell investors everything they need to know in this quarter. they are not doing it because they are evil or duplicitous. there's a fine balance between public disclosure and your duty to the corporation. the board of directors don't have a duty to shareholders. they have a duty to the corporations so they try to balance the two and based on what they know today, they think that reserve is adequate. >> a couple of quick questions to move through as quickly as possible. cell of the non auto assets, and collapse gmac back into gm and take it to the bankruptcy and try to accomplish the same end
to get the auto finance part back into gm not only because gmac doesn't make sense but to strengthen gm and get the non auto part back -- whoever you can sell. is that the view of both of you? >> i am not sure what happens with the other aspect but as it relates to the -- the proper home would be within gm and gmac integrated. >> i want to be sure. you think that is the best thing they can do to save gm. >> from a competitive standpoint as they compete, at a valuation. at some point they come back to the capital markets and the discount will be greater if they are not part of general motors. >> and you add to those two points, the risk associated with
rescap if someone else picks that up? >> if i were representing gm i wouldn't let them buy it back unless i had an ironclad understanding with respect to other liabilities. it raises the point again but let me say this to madam chairman. people misunderstood t.a.r.p.. we should not be dancing in the streets because banks have repaid their t.a.r.p. loans. i would take the t.a.r.p. money and charge it off. take your worst loans, charge it off. don't give me the money back. of the point is reviving the u.s. economy reviving lending which is shrinking at 10% annual rate if you look at the latest fdic data we haven't achieved anything. we should have told everyone of these institutions to charge it off because the benefits to the economy, we would have done enormous leverage and we are
counting these pennies while our financial system is shrinking. that is my perspective on it. >> thank you. mr. atkins? >> i tried to explore an earlier panel about cutting financing crunch that gmac is going to be having. over the next three years they have $60 billion of debt coming do. they had $2 billion, 8.3% for five year notes. my question is what is the appetite the industry is considering war in the markets, considering all the things the company has done to fix this balance sheet, what do you view as the likelihood of more t.a.r.p. funds being thrown at
the firm? >> as i said before, there is a freestanding entity, i don't know that i would be a buyer of that paper. it would have to be quite high. it would be junk financing. >> does 8.3% count for that? >> i don't know. i would defer to michael ward on that as far as industry financing spreads. if you aren't investors staring at rescap because you are buying debt from the parent, there's a big question about it. >> the financing rates sounds right. from the automotive perspective historically the automotive paper is a good paper. one of the things that happen is the dubious players were bear stearns and lehman brothers. you had the destruction of the market and the two biggest players in the securitization market disappearing. you start to see some life in the securitization market freestanding away from talf.
as profitability starts to come back to the industry, the worst is over. i expect the appetite to improve. >> talf ends. one last question. we spoke with the earlier panel's about how easy the competitive nature of this business and how difficult it is for competitors to come in and one of the rationales of course of the bailout, gmac -- what is your view with respect to the ability of other companies to picked up in here? is it very siloed type of thing or are there structural problems to this market? >> it has already been alluded to. manufacturers provide financing for their sales and this is common in those industries and that is how you should look at
this. when a bank comes in to provide financing for auto dealers and this is heard from management. someone was providing financing to other sales. they are picking off the better customers by definition. they are not there to get the worst customers. the captive is financing the rest. that is where they get volumes and take the risk. i agree with what the ceo had to say about that. >> thank you. appreciate it. >> i want to clarify, really understand your assessment of the risks of remaining not only a monologue but an independent with gm and how critical a risk is that if this institution remains with that level of independence? >> it is the only way these
businesses work. this is basically a bank holding company looking for a business model right now. i am very sympathetic to the people involved. i know they're doing their best but the truth of the matter is when the private equity boys took this company they were engaged in some arbitraged. we are paying the price for that. the only rational decision, if you really want to help gm, is to put this through restructuring, sell the auto business back to them and leave the rest for the trust the to deal with. everyone screams about lehman brothers but harvey miller and good people in the southern district of new york the brilliant job on that bankruptcy. it is the case study in how you deal with a complex financial institution and we ought to take their example. the only thing we lack is courage. >> is it possible there are plans to encourage other competitors in this market? is that a possibility?
we hear the reasons why other banks are not in this business because of expertise in systems and knowledge bases. is that why they are not in this business? >> they had hard lessons. ge throughout the 1980s provided financing for chrysler. some of the other losses, the banks are certainly aware of the size of the market and the appetite but the ease of the flow going from the dealer order financing products through the customers is just one integrated package. it is a revenue engine and it continues. they are well aware of what the market is like. they can't compete. they haven't been offered what the financing companies get. as a result they can't compete. >> mark mcwatters? >> i am done.
>> good. thank you, michael ward and christopher whalen. express a little frustration. we asked treasury to stay so that we might ask some questions at the conclusion of your testimony. they elected not to. i am sorry for that. i would like them to make some remarks in this context. i can assure you we will ask the questions based on your testimony as we go forward in our conversations with the treasury and with gmac. thank you very much for being here today. the record will be held open for additional questions. thank you all. this hearing is adjourned. >> which four presidents lived past 90 years old? john adams, herbert hoover, ronald reagan and gerald ford.
find these and other presidential facts on gmac today c-span's new book who is buried in grant's to? >> the travelogue is also in many history, a work of biography of each of these presidents. you can tell a lot of people at the end of their lives. >> the story of their final moments and insights about their lives. who is buried in grant's's to? now available at your favorite book seller or get a discount that the publisher's website. type in grand's tomb and check it out. >> digital archive of c-span programming from barack obama to ronald reagan and everyone in between. over 157,000 hours of c-span video now available to you fast and free. sign up at c-spanvideo.org.
>> live to the u.s. capitol as the senate convenes for morning business. speeches on any topic. with a jobless benefits expiring sunday and extension through april 5th is on the line republican senator jim punting says he will block the measure because its spending is not offset. the bill includes other extensions like surface transportation and flood insurance programs. house is working and fiscal year 2010 intelligence programs with a final vote expected to day. live house coverage expected on c-span and extended coverage on michael ward. senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. eternal spirit, the source of our peace, again at the beginning of another day's
deliberations we crave your guidance and peace. lead our lawmakers. take away any blindness that would prompt them to travel down the wrong path. lord, lift their hearts and minds into the light of your presence empowering them to fulfill your purposes on earth. help them to hear your voice above the hum of their daily labors and beyond the clapper of the -- clamor of the noises that distract them from their eth kol resolve. give them special -- ethical
resolve. give them special gifts of understanding, wisdom, patience, and strength. we pray in your merciful name. amen. the presiding officer: please join me in reciting the pledge of allegiance. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c, february 26, 2010, to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable mark warner, a senator from the
commonwealth of virginia, to perform the duties of the chair. signed: robert c. byrd, presidet pro tempore. mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: this morning the senate will proceed to a period morning business. senators will be allowed to speak for up to 10 minutes each. there will be no roll call votes during today's session. however, there will be a vote tuesday morning before the caucuses will have probably be an hour after we come in, but we'll make that decision a little later today. we'll see if we can get an agreet. if not, that's what we'll do. we'll continue to try to reach an agreement to extend the 30-day expiring provisions including unemployment insurance, cobra, flood machine, highway funding, small business loans, small business provisions for the american recovery act, and the satellite home view act. the s.g.r. and poverty provisions all extremely important. especially to those people who
are unemployed and those people who on midnight sunday night will lose the ability, almost 1.5 million people in rural america, will no longer be able to watch local television. the presiding officer: under the previous order the leadership time is reserved and there will now be a period of morning business with senators permitted to speak therein up to 10 minutes each. the senator from illinois. mr. durbin: mr. president, last night a number of senators stayed on the floor until almost midnight and i thank the staff and pages for their endurance and patience. but it was over an issue which was critically important to our nation. it's an issue which relates to this recession we're in and the fact that literally millions of americans in every state across america are out of work and doing their very best to find jobs. it's not easy. there are as many as four
unemployed workers for every available job. people are taking jobs that pay substantially less than what they're used to earning in the hopes of keeping their family together and weathering this economic storm. some of the sacrifices that are being made will literally change lives and families forever. people are losing their homes because of a loss of jobs. folks are finding their kids have to drop out of college and come home because the families can no longer afford to help them pay for tuition and the expenses of higher education. some families in desperate states straits are turning to -- straits are turning to food banks. they tell me this there is a dramatic increase of people who come in looking for the basic food they need to put on the table to keep their families together. some of these families have lost their health insurance. it's one of the first casualties
of losing your job. unless you have lived as a father of a sick child without health insurance, you can cannot imagine what goes through your mind in that circumstance. it happened to me when i was first married and didn't have health insurance and had a sick baby. my wife and i prayed to find the their she needed when we didn't have the health insurance to cover it. for millions of americans that is not only a threat, it is a reality. when you look at this hardship that many americans are facing, through no fault of their own, and despite their heroic efforts to put their live back on track, i believe it is unthinkable, unforgivable that we would cut off unemployment insurance payments to these people, that we would cut off cobra payments, which helps them to pay for their health insurance while they're unemployed. and, yet, that's what's going to
happen sunday night. it's because the senator from kentucky has objected to extending unemployment insurance payments and cobra health insurance payments for 30 days. in my state there are 15,000 people who don't realize this morning but will come to realize monday morning that their life is dramatically changed. they're not only out of work. they're not only struggling to survive, but that one lifeline, that unemployment check that keeps them together that provides $250 a week so that they can get on with life and try to turn the corner is going to disappear. and you say, well, why? what is it that has brought us to the point where we as a nation would cut off help for our own people? the senator from kentucky explained last night it's because he wants to balance this budget. he wants to cut the deficit. he is concerned about the debt. well, i share his concerns.
and what was said last night by so many members of this side of the aisle was, for goodness sake, find a way to express your political views that's not at the expense of these helpless people. that's why so many members stayed here until almost midnight talking about it. senator stabenow from michigan, what a terrible economic situation in her state. one out of six people in her state are on food stamps an they've had high unemployment for the longest time because of loss of manufacturing jobs and other unemployment opportunities. it is an awful situation repeated in rhode island where they have one of the highest unemployment rates in the nation. they were the first in the recession and are struggling to get through it. it's a small state in comparison to illinois or michigan, but, you know, when senator jack reed came to the floor and senator sheldon whitehouse, they talked about hundreds of people that
their state who will be cut off from unemployment checks on sunday night because of the objections of one senator who say that we have to learn our lessons about deficits. the simple fact of the matter is that this is an emergency situation and should be treated as such. if the floodwaters were rising in kentucky or illinois, and people were displaced from their homes, desperate to survive, we would not sit down and do a calculation about whether to send them emergency aid. we would do it. because we are a nation that cares. and a nation that responds. and we believe that helpless victims deserve a helping hand. these are helpless victims of the recession and they're helping -- their helping hand is an unemployment check which will be cut off sunday night because of the objection of one senator. some came to the floor last night, senator corker of tennessee, who i respect who said i don't think you ought to be doing this. i don't believe this is how the
senate should work. we should come and renew the unanimous consent request to extend unemployment for 30 days. and i would say to senator corker, whom i respect, and senator bunning whom i respect very much, we were cut by surprise last night. we couldn't believe we would actually have the senate go home to our home states, to the loving arms of our family, to a relaxing weekend and know that sunday night unemployment checks would be cut off across america for hundreds of thousands of people. that came as a surprise to me last night and that's why we gathered on the floor and talked about the economy and this issue. and we talked about the deficit. and we pointed out to the senator from kentucky that he has voted for tax cuts that were not paid for, obviously, that added to the nation's deficit. he has voted for programs not paid for that added to the nation's deficit. and, yet, now he's decided to make his stand not when it comes to tax cuts for wealthy, but unemployment benefits for the
poorest struggling families in america. it is a stark contrast. we have begged him to save this debt debate to a different day and a different issue and please don't victimize these helpless people who are struggling to get by. last night we were not successful in that effort. i don't know if the senator has a change of heart today. i hope he does. i'm going to renew my unanimous consent request that i made last night. i hope that we can agree to go forward. i certainly would say to the senator from kentucky we have ample opportunity in the days ahead to debate this deficit and debt in the budget resolution, in our appropriations process, in virtually every bill that comes before us. why did he picked the unemployed families of america falling behind, losing their homes, struggling to survive to make your political point about debt
and deficit? one of the senators oh, you know, in a week or so we'll probably send those benefits along. i guess that's true i hope it's true we may eat up three or four day ons the senate to get it done instead of just doing it instantly this morning as we can. and in the process in my state, state of virginia, the state of kentucky, there will be people unemployed who won't receive their checks and will go through the anxiety of wondering what happened in washington that caused me to lose that check that i needed so desperately to keep my home, to care for my kids and to try to turn my life around and get another job. that, to me is an unacceptable approach to georgeing. it's one -- governing, it's one that i hop that we don't do. mr. president, i ask unanimous consent that the senate proceed to the immediate consideration of h.r. 4691, a 30 day extension
of provisions which expire on sunday january 28, satellite home viewer act, highway funding, s.b.a. business loans and small business provisions of the american recovery act, s.g.r. an poverty guidelines received from the house and at the desk. that the bill be read three times, passed, and that the motion to reconsider be laid on the table. the presiding officer: is there objection? mr. bunning: reserving the right to object. the presiding officer: the senator from kentucky. mr. bunning: first of all, let me say this, i believe the senator from illinois is correct. that everybody in this chamber wants to extend unemployment benefits, cobra, health care benefits, flood insurance, highway bill assistance, medical doc fix, small business loans, and rural satellite television for viewers that can't get cable or something.
if i -- i will not object if the senator from illinois amends his unanimous consent request to adopt my or any amendment that pays for the bill. we had a paygo vote last week and the senate voted to pay for all the bills that come through. or i won't continue my -- continuing my reservation,ly not object if the senator from illinois would spend the $10 billion that it costs to renew these extenders for 30 days. for example, we could do across the board rescission of the bloated omnibus appropriation bill that was passed for this fiscal year which increased appropriations by 10%. that's just one, besides my
pay-for, which you have objected to. if we can't find $10 billion somewhere for a bill that everybody in this body supports, we will never pay for anything. so i continue my objection. the presiding officer: objection is heard. mr. durbin: mr. president? the presiding officer: the senator from illinois. mr. durbin: earlier this week, the senator from kentucky made the same request. the senate majority leader, harry reid, said to the senator from kentucky, i will give you a chance to come to the floor, offer your pay-for amendment, fully debate it and put it up for a vote. if you can convince a majority of the senate to do that, you will prevail. if you can't, then we will treat this as we have so often as emergency spending and proceed to help these unemployed people. the senator from kentucky
rejected that and said that he did not want to bring this matter to the floor for a vote because he might lose, and i think it's possible he might lose. the presiding officer: the senator's time has expired. mr. durbin: i ask unanimous consent for two additional minutes. the presiding officer: without objection. mr. durbin: i would just say to the senator from kentucky if he has a way to pay for this and wants to offer it as an amendment on the floor, we have given him an opportunity to do that, but for him to say that he wants to dictate how this is going to be paid for from sources that, frankly, many of us believe are not realistic in any way whatsoever. he wanted to take the money from the recovery and reinvestment act that has already been committed to construction projects and to tax cuts across america, he wants to take that money out and reduce the tax cuts for working families, and i would vote against that. i think that is very shortsighted and it will hurt our economy rather than help it. if he wants to make across the board cuts in appropriation bills, he ought to have an
opportunity to offer that amendment, and he has had that opportunity, but he doesn't choose to do that. he wants to be guaranteed that he will win. while there are -- well, there are no guarantees you can win, but i can tell you this, there is a guarantee because of his objection that hundreds of thousands of unemployed americans will lose. come sunday night, they will have their checks cut off. and to be told that people have a -- you know, a beeght heart and care about unemployed people and to cut off their unemployment checks, it just doesn't track, and i don't think it's any comfort to these families to believe you really care but you're going to cut off their checks anyway. what point are we going to make here? just how hard we can be, how tough we can be? at what expense? the most vulnerable families in america are going to suffer because of this political decision by one senator, and i think that's unfortunate. i'm sorry that he has objected. i promised i would not renew the objection this morning, but we
will be back. we will try to get this done. and to those families, hang in there. after the politicians are finished with their speeches and debates, america's not going to give up on you. it's going to be tough for a while while we work out this political difference, but unfortunately that reflects the senate and where it is today. i yield the floor. mr. bunning: mr. chairman? the presiding officer: the senator from kentucky. mr. bunning: i would like to ask unanimous consent that the senate proceed to the immediate consideration of h.r. 4691, that the amendment at the desk which offers a full offset be agreed to, the bill be amended -- the bill as amended be read a third time and passed, and the motion to reconsider be laid on the table. the presiding officer: objection is heard. mr. bunning: well, we have tried to work this out with the majority, particularly after the pay-go vote last week.
when 100 senators are for a bill and we can't find $10 billion to pay for it, there's something the matter, seriously the matter with this body. i've said that last night. i don't want to repeat myself. i have offered several ways to pay for it. if everybody in this chamber -- and there is no senators except me here right now, but there are 100 members of this body -- believes as the senator from illinois does that this is essential and we should pass it, then we should pay for it. there are going to be other bills brought to this floor that are not going to be paid for, and i'm going to object every time they do it. i don't much agree with the
chairman of the federal reserve, but it was striking yesterday when he said if at the present level of debt and the present administration's budget is passed, that the debt of the united states will be unsustainable, unsustainable to me means that there is a chance of one of the rating agencies downgrading the rating on our debt. we cannot allow that to happen. because i have got too many young grandchildren that want america to be the same america that i grew up in. and i'm worried to death that that's not going to be the case. so, mr. chairman, i yield the
mr. reid: the majority leader. mr. reid: i ask unanimous consent that the call of the quorum be terminated. the presiding officer: without objection. mr. reid: mr. president, i ask consent that the senate proceed to executive session to consider calendar 527, the nomination of barbara keenan to be the united states circuit judge for the fourth circuit. the presiding officer: without
objection. mr. reid: i have a cloture motion with respect to that nomination. the presiding officer: the clerk will report the nomination much. the clerk: nomination, the judiciary, barbara keenan of virginia to be united states circuit judge for the fourth circuit. the presiding officer: the clerk will report. the clerk: cloture motion: we, the undersigned senators, in accordance with the provisions of rule 22 of the standing rules of the senate, do hereby move to bring to a close debate on the nomination of barbara keenan of virginia to be united states circuit judge for the fourth circuit signed by 17 senators as follows: -- mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: i ask that the reading of the names be waived. the presiding officer: without objection. mr. reid: i ask on tuesday, march, 2, after a period of morning the senate proceed to executive session to resume consideration of the keenan nomination at the time until 12:15 be for debate only on the motion to invoke cloture on the nomination with the time equally
divide and controlled between leahy and sessions or designees. that at 12:1:25 that there will be a vote on the motion to invoke cloture. the presiding officer: without objection. mr. reid: i ask that the senate resume legislative session. the presiding officer: without objection. mr. reid: mr. president, we talk a lot in the senate about procedure. our debate sometimes relate only to procedure. and often that's appropriate. and, as we know, sometimes these procedural rules we have in the senate are complex. but the issue before us today is not something that's arcane, very, very ritualistic or very complex. it's very simple. and it's clear -- clear that it's going to be a lot more noticeable by people monday morning. because it's going to affect the lives of thousands of americans and their livelihoods.
the issue before us is this: our country is in the state of economic ter pistol. economic -- turmoil. lots of people are out of work. lots of people have been out of work for a long time and they're trying to make ends meet, drawing unemployment compensation, which is something that we've had in effect in this country for a long time. by monday morning tens of thousands of nevadaians and more than one million americans rely on unemployment insurance and health benefits will simply lose them. we have traditionally during times of stress automatically given unemployment benefits, and we'd should do that. these people are getting poorer every day. they're out of work for long periods of time. unemployment is rampant in every single state in the country. some worse than others. so many of those unemployed lost
their jobs through no fault of their own. those opposed to helping people who are down and out at a time of greatest need shouldn't have to talk about process. if you can't afford to feed your kids, process doesn't mean a thing. if you can't make your car payment, that doesn't mean one thing to talk about process. if you can't make your house payment, if you can't go to the drug store to buy a prescription that needs to be filled, process doesn't matter. if we don't act, these benefits will expire, but their need to buy groceries, medicine, car payment, house payment, that doesn't expire. those benefits will expire, but they need to heat their homes, it's winter time.
putting gas in your car doesn't expire. those benefits will expire. i repeat, the need to take their medicine doesn't or take care of a aging parent or take care of their children, that doesn't expire. they don't care a thing about process. the catch here is that these benefits don't need to expire. we have the ability right now to extend for just a short time until we work out a longer-term solution, which we're going to work on that on monday. it's irresponsible and, basically, mr. president, it's immoral. a senator: mr. president? the presiding officer: the senator from texas. mr. cornyn: mr. president, i wasn't on the floor after the vote last night, but i did get a
chance to read some of the transcript of the back and forth between senator bunning and -- and senator durbin and others. and since i understand that senator durbin retained the floor for the most part and yielded for questions, but, basically, the procedure denied senator bunning and senator corker, who i know was also -- also weighed in an opportunity to explain precisely what was going on. i have seen some news reports this morning that have suggested that because of the objection to more deficit spending in order to pay for this temporary extension of benefits, that this was an unreasonable and -- thing to do. to actually insist that congress pay for benefits that it's providing. but i'd like to put it in a little bit of context.
i think there are two things that are causing the lack of approval of the american people of congress these days, it boils down to two things. one is a lack of fiscal discipline. and the second is a complete lack of credibility whatsoever when it comes to fiscal matters. let me give you one example. paygo, the so-called pay as you go requirement that was passed about two weeks ago in the jobs bill that was passed earlier this week, $15 billion, the senate voted to waive those pay-as-you-go rules that it passed two weeks ago and the president signed into law with great fanfare. but it -- the problem goes farther than that. it's not just the senate being unwilling to live by the very
law that it passed two weeks earlier and signed by the president. it is sort of the illusion of the fiscal responsibility. let me tell you what i mean by that. for example, within the paygo requirement itself, i think most americans would be surprised to learn that discretionary spending, which is about one-third of the federal budget is exempted completely. in other words, the senator from new hampshire -- the senior senator from new hampshire frequently calls this the swiss cheese paygo because it is so full of holes because it is not really what it would otherwise appear to be, and you can see why if it exempts discretionary spending much nor does paygo go to current spending baseline. many of us talked about the $38 trillion in unfunded liabilities for medicare itself, which is not fixed, which is actually made worse by the health care proposals that have
been made by the president most recently and which passed the senate on christmas eve. the paygo rules don't even apply to current entitlement spending. and so under the rules that give the illusion of fiscal responsibility, but not the reality, entitlement spending can continue to grow 6% annually. well, suffice it to say as well that the problem that the majority leader just got through talking about, which are the inability to pass these benefits because they're not paid for is really a product of his own creation. you recall a couple of weeks ago senator baucus and senator grassley were working on a large jobs bill, which was a bipartisan bill, which was rejected in its entirety by the
majority leader in favor of a partisan bill. and he didn't allow any amendments. didn't allow any other suggestions. that was the very jobs bill that was passed by waiving the paygo requirement. all the senator from kentucky has asked for is that we do what every american family has to do and what every small business has to do and that is be honest in our indicating of the public's money and to not continue a sham, which is to pretend like we're being fiscally responsible when, in fact, we're not by waiving the requirements, by creating the perception of fiscal responsibility with the paygo rules which are so fraught with exceptions that they really don't mean what they're sometimes represented to me.
-- to mean. so we know that there's broad bipartisan support for the legislation that's pending before the -- this body. all the senator from kentucky has asked for is that it be paid for. that we not add $10 billion more on top of the deficit. that is on top of th the $1.6 trillion that exists. that's just the deficit. that's not the unfunded liabilities of the federal government. i'm advised, mr. president, that there's about $100 billion left in discretionary spending from the stimulus bill that was passed the first part of last year. $100 billion. using those funds -- using $10 billion of that to pay for this extension of jobless benefits and other benefits does not seem like an unreasonable request at all. it does raise the question again of whether congress is
continuing to say one thing and do another. i remember when we talked about those stimulus funds, that it was advertised as being targeted, timely, and temporary. well, we know it was none of those things. because now there's still $100 billion left in discretionary spending here a year later and along with the tarp, which is used as sort of a revolving charge account by congress, again, more deficit spending, that there's been anything but fiscal responsibility when when it comes to doing the people's business here in the united states congress. if there is one message that i hear from my constituents in texas and other people around the country, it is stop the spending and be responsible when it comes to these unmet liabilities whether they be annual deficits or when it comes to unfunded federal liabilities.
but while congress purports to be fiscally responsible on a number of fronts, you see small bills like this benefits extension not paid for, for, $10 billion a clip, which continue to add up and pass the burden of -- make paying for that on to our children and grandchildren, bus that's what they are going to inherit is huge deficits, huge unfunded federal liabilities that they're going to have to pay for, not the present generation, and that's just not -- not right. so i want to say that i admire the courage of the junior senator from kentucky, senator bunning. it's not fun to be accused of having no -- no compassion for the people who are out of work, the people for whom these benefits should be forthcoming and i believe will be
forthcoming, but somebody has to stand up finally and say enough is enough, no more intergenerational theft from our children and grandchildren by not meeting our responsibilities today, and that's what i interpret him to have done. and if the majority leader and the majority wanted to have this taken care of, they could have had it done in the baucus-grassley bipartisan bill that the majority leader shelved in favor of his partisan jobs bill. and i anticipate that next week when we do take up further legislation, that we will take care of these requirements that are now being objected to because of deficit spending, and that is appropriate. but i hope, unlike this current proposal, that we will do the right thing by the american people and by our children and grandchildren and not borrow or probably more correctly stated
steal from future generations. we will meet our responsibilities by making sure that any legislation we pass is paid for by an offset, unlike the current bill that has been objected to. mr. president, i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:
a senator: mr. president? the presiding officer: the senator from colorado. mr. udall: mr. president, i ask unanimous consent the quorum call be vitiated. the presiding officer: without objection. mr. udall: mr. president, i ask unanimous consent that the record remain open today until 12:30 p.m. for the submission of statements, adding cosponsor, bill instructions and the submission of resolutions. the presiding officer: without objection. mr. udall: mr. president, i understand there are two bills at the desk and i ask for their first reading en bloc. the presiding officer: the clerk will read the titles of the bill for the first time. the clerk: h.r. 4626, an act to
restore the application of the federal antitrust laws to the business of health insurance to protect competition and consumers. h.r. 4691, an act to provide a temporary extension of certain programs and for other purposes. mr. udall: mr. president, i now ask for a second reading en bloc and i object to my own request eenblock. the presiding officer:objectione bills will receive their second reading on the next legislative day. mr. udall: mr. president, i'd ask unanimous consent that when the senate completes its business today, it adjourn until 2:00 p.m. monday, march 1. that following the prayer and pledge, the journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, and the senate proceed to a period of morning business until 3:00 p.m. with senators permitted to speak therein for up to ten minutes
each. that following morning business, the senate proceed to consideration of h.r. 4213 as provided for under the previous order. the presiding officer: without objection. mr. udall: mr. president, there will be no roll call votes on monday. the next roll call vote will be at 12:15 p.m. tuesday, march, 2 on the motion to incloak cloture on the nomination of barbara keenan to be the united states circuit judge for the fourth circuit. if there's no further business to come before the senate, i ask that it adjourn under the previous order. the presiding officer: the senate stands adjourned until 2:00 p.m. on monday, march 1.
>> he is responding to an ethics committee statement yesterday. this is about five minutes. >> good evening. i don't think that i will be taking any questions, but i just got a copy of the press release issued by the ethics committee. and it is to enhance pages, and one paragraph deals with me. the report further finds that
representative charles -- can i get this duplicated? -- >> it's not an official press release yet but by the time we finish your it should be. >> the report further funds that representative charles rangel violated the house gift rules by accepting payment for reimbursement for travel to the 2007 and 2008 conference is. the evidence shows that members of representative wrangles staff knew that corporations have contributed fund that they knew were sponsors of the trip for 2007 and 2008 conference is. this information was not provided to the standard committee when he sought and received approval from the committee to accept these trips. the committee does not find any evidence to conclude, nor does he believe, but it won't discover additional information
to alter, to alter the conclusion that representative frankel had any knowledge of the memorandum written by his staff. however, the report finds that rangel was responsible for his death in the performance of their official duties. so it is the intention of the committee and the publication of this report will serve as a public admonishment by the standards committee to retake the cost of the trips to the respective entities that paid for the travel. because some portions of the transportation costs was paid for by the news out out the funds the actual source of which not to be determined, the committee will require the suns, this is repetition. now, what this says is that the report would indicate that two members new that somebody from the private sector was asked to
make a contribution to the crypt news who was the sponsor of the trip. and one of the people that did that was discharged your and the ethics committee knows that. staff member. they say there's no evidence, nor would there be, they don't think they could find any additional evidence to alter the conclusion that i didn't know. and they move on with the admonishment. i -- i am disturbed that legally one can say, what the report will be saying, that a member of congress did not know that false
information -- strike that. what this amounts to is the ethics committee authorized my trip and other members trip to go there. but they said that the ethics committee did not have all of the facts in terms of what was applied by the crib news. and that the crib news was receiving corporate money but did not tell the ethics committee and that's why the ethics committee okayed the trip. but they also are saying that my staff member, there were two of them, knew that corporations were given to the crib news. but rangel didn't know. but because they were my staff members who knew, one of whom was discharged, that i -- i should have known.
they don't even go that far. that is imputed to me. so the word if you did to me, i think, i don't want to be critical of the committee, but common sense dictates that members of congress should not be held responsible for what could be the wrongdoing of mistakes and errors of staff, unless there's reason to believe that the member neil or should have known. and there's nothing in the record to indicate the latter. so i have to now deal with my lawyer as to what the hell do they mean, that something is imputing? doesn't mean that the matter, no matter what a staff member does, if the member doesn't know it, that the member could be charged and admonished publicly for it? and i think right now i just
have to let the general community make its own judgment, based on what the ethics committee have said. and then i will get back to you with a larger statement when i have more information as to how these conclusions will be. but i am sharing with you all of the information. so asking me questions would just embarrass me, because i can't give you answers. this is everything i know. and this has not been -- you've got a scoop, because -- [laughter] >> for what it's worth. i mean, you don't want to talk about the jobs bill or anything like that, so this is the news. [inaudible] >> yes yes. this will be issued tonight. but you tell the editor that you got this privately from me. >> thank you very much. thank you. >> what's your name? [inaudible] >> what paper?
>> cnn. >> i'm surprised. i really am. if you were the "new york times," it would be different. [laughter] >> [inaudible conversations] [inaudible conversations] >> congressman wrangell from yesterday. this is from just a short while ago. spiegel pelosi's office. she was asked about the report on congressman rangel. meanwhile, "the associated press" reports that representative gene taylor of mississippi is calling on congressman rangel to step down as the top tax writer in congress. congress been taylor suggest he should give up his chairmanship of the ways and means as according to "the associated press." speaker pelosi's next. >> good morning. what were you up to yesterday? watching tv? it's funny how people react.
people said to me everybody comment on how crowded the room was. i thought, they didn't even notice. i don't know. was that an issue? i don't know. what we were focusing on was healthcare and of course, outside that room were focusing on jobs and how we can move the legislation. we will have a series of jobs pieces and the house bill will soon be voting on higher, hiring incentives to restore employment. remember that acronym. and encouraging next step to put more in our drive to put more people to work. this is an important bill because it has targeted investments to spur job creation in energy and infrastructure, and then it provide specific support to small businesses with tax credits and accelerated write-offs. very important. small businesses one of our focuses as you know. this is part of our ongoing
broader agenda, expanded lending to small business, building highways and transit, support job training, hopefully summer jobs in the next bill. keep police, fire and teachers on the job. yesterday, once again, the president brought together democrats and republicans to export areas of agreement to seek out common ground and to discuss a passport on health insurance reform. as many of you recall, one year ago nearly, march 5, 2009, president started this bipartisan conversation at the white house at the summit. it was a great day, but it was democrats and republicans outside stakeholders, consumers, i'll present. so of course the bread country and biggest present outside the present was when senator kennedy came into the room and said i am here to sign, to enlist as a foot soldier in the fight and the campaign to pass healthcare
reform. it had been his life's work. he would later say to the president, this is about -- not about the details of policy. it's about the character of our country. many of us carry that with us as we go forward, as we have gone forward in this campaign and brought it to the table yesterday. we also brought to the table the concerned that american families have when they sit down at the kitchen table to talk about their job security, the education with her children and how they can afford that, their pensions. and of course, how are they going to pay their medical bills. we must always be mindful of that, that what we do is relevant to their lives. i was very proud of the president's presentation. for those of us who've been involved in this issue for decades, to see the encyclopedic knowledge that he has of the issue, the perspectiperspective an issue that he knows on the subject, and division that he has come his vision and he wants
to build consensus. he started that only six weeks after his swearing-in last year with a march 5 meeting. it continued through the consideration of the bills and committees here. took a while to get the senate more time to read some bipartisanship, and still, hasn't the door open to that. and hopefully we can find some initiatives to incorporate in the bill, in addition to the over 100 republican amendments that are already accepted into the house and senate bills. more like 150. but well over 100 a minute that the republicans have put forth. if there are any others that we can accommodate we certainly will. i'm not of the school is is unless you vote for the bill, we're not going to accept your eminent. if they have a good idea and worked for the american people, brought low, we welcome it. i think most are coming out of the meeting yesterday if you want to know what i thought, is
that two things were clear. that the president clearly has recognize and it was evident yesterday that in order to improve healthcare insurance, health insurance for the american people, we must have some regulation of the insurance industry. we have to go beyond the status quo. it was clear also that the republicans were accepting of the status quo. i was very proud and mentioned that on wednesday we passed in the house with overwhelming bipartisan support, like 410-19, something like that. 406-19 to remove the exemption for insurance, health insurance companies, that they've had for over 60 years, which has not serve the american people well. i think left to their own
devices the insurance compass have behaved very poorly and american people have paid the price. so this legislation is essential. one other point that i think was clear is that while we all talk about him being, denying coverage on the basis of pre-existing conditions, which is probably the most needed and desired reforms that the american people recognize and want is something that democrats stand fully behind, and the republicans do not have it in their bill. and when they say they support it, you have to store the underlying bill. if you're going to have that prohibition on discriminating against people on the basis of pre-existing conditions. if you don't, you're giving the insurance companies, once again, a license to hike up the prices. so this has been about lowering
cost, improving cost, improving coverage that now we can move to place we cannot comment whatever suggestions people have using the president's bill. not bill, but proposal he put on the internet monday. had to go from there and talk about what's in the bill. not the controversy around the bill, but what is in the bill. it is about the future, about innovation, it's about prevention, it's about diet, not diabetes. it's about health the america, not just healthcare for america. it's about -- is very exciting because it will take us down a new different path that allows for effective, effective initiatives to take old rather than just building on what we have done before. it's about what is new and innovative. it's pretty exciting, and i look forward to where we go next, which is as i said to accommodate whatever suggestions there are, using the president's
-- i think that's probably a good place to build upon because he took what he saw with the house was just him, what the senate was digesting, and listened to some republican ideas, and they are in the senate and house bill anyway. in addition to that i want to make this further point, and that is the other debate that that you saw, start over, itsy-bitsy spider, teeny tiny, you can't do it. certain things, and lets you do them together, it doesn't have the impact that it doesn't have the synergy. it doesn't hold the insurance companies accountable. and so i really wasn't very pleased with how the president of course, but also the members made it very clear, senator harkin said it best, it's like it so somebody is drowning, 90 feet outcome you throw them a rope 10 feet out and say we're doing this incrementally.
it just doesn't work. people sitting around the dinner table, they need a lifeline on their medical bills. everybody who spoke yesterday spoke about stories that they had, whether they met these people in person, whether they are it constituents or family members, or letters they had received about how medical bills were just pulling them down. not only healthwise, but economically. so again, we will be seven hours, i think it made a difference, and it moved us closer to passing a bill that meets the aaa standard of accountability, of the insurance companies, accessibility of many more people, and very important to us in the house, affordability for the middle-class. without, i would be pleased to have any questions. >> i'm sure you know, they admonished the rangel. do